Small savings fund gives Air India Rs 1,000 crore lifeline

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New Delhi, Oct 18: Air India’s (AI’s) long wait for equity infusion is finally over. The government has given the cash-strapped airline Rs 1,000 crore from the National Small Savings Fund (NSSF). AI will now avail of its unused sovereign guarantee to raise another Rs 500 crore as a loan next week.
“We got this equity infusion recently. The government had given us sovereign guarantee to raise Rs 3,500 crore as loan. We have raised Rs 3,000 crore so far and will avail the remaining amount by next week. The financial position is now slightly better after the equity infusion,” said a senior official.
Earlier this month, oil companies had threatened to discontinue jet fuel supply to domestic flights of AI group airlines — AI, AI Express and Alliance Air — at eight cities, including some state capitals like Chandigarh, Patna, Jaipur and Lucknow. This threat was warded off when AI coughed up Rs 100 crore. The Maharaja owes about Rs 4,200 crore to oil companies as dues and current outstanding in credit period.
AI had sought a Rs 2,121-crore equity infusion from the state after the unsuccessful divestment bid. But the government had some months back sought Parliament approval for giving Rs 980 crore in the current fiscal. “Further equity infusion this fiscal will need to be approved by Parliament in the winter session,” said a source.
The airline has undertaken a major cost-cutting programme and is looking at every option closely to cut expenses. It halved the quantity of cheese board carried for premium passengers on its international flights, cutting catering cost by Rs 2.5 crore.